Business News

Property prices will fall if Britain leaves the European Union without a trade deal, a new report states.

This country faces Brexit-related risks because of its tight links with Britain, its largest trading partner, according to ratings agency Standard and Poor’s (S&P).

“Should the UK government fail to secure a transition phase and crash out of the EU without a trade deal, Irish trade with the UK would likely suffer, including residential investment in Ireland originating in the UK,” the report said.

“In that case, our forecast for house prices would likely be substantially lower.”

However, it said if a situation where there is no trade deal is avoided then property prices will keep rising.

It predicts that prices will rise largely due to the labour market continuing to perform strongly.

“This should continue to support demand for housing, but also help with further deleveraging of household debt, which stood at 142pc of disposable income in the second quarter of 2017,” according to the report.

Last year saw property prices rise at double-digit rates.

But this was down to “very solid economic growth overall” from the recovery in employment and what the report called a moderate acceleration in wage growth.

House price rises have also been driven by a pronounced and persistent shortage of supply since the crisis.

The has led to a 39pc rise in residential construction volumes year on year, it said.

But the S&P report said construction output is coming from such low levels that it will take another four years’ growth at the current rates to regain pre-crisis levels.